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Country - Netherlands
Sale and Purchase
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A. ACQUISITION OF REAL ESTATE
Applicable legislation
Articles 7:1-50 Civil Code (sale/purchase); articles 3:80-106 Civil Code (transfer); articles 5:20-36 Civil Code (ownership).
Is the purchase of real estate assets by foreign investors subject to restrictions?
No.
Do different legal regimes apply to the transfer of title to different kinds of real estate (commercial, residential, manufacturing)?
The sale/purchase agreement must be in writing if the property is residential and the buyer is a private individual, acting in a private capacity. Buyers of residential property have a three day cooling-off period in which they can dissolve an agreement without any consequences.
Do mandatory pre-emption rights apply to the sale of real estate assets?
Yes, an agricultural lessee has pre-emption rights and a local authority can also impose pre-emption rights on a property under the Municipalities Preferential Rights Act.
Is expropriation (compulsory purchase) possible?
If so, under what conditions?
Yes, local authorities can expropriate property if this is in the public interest, as expressed in a zoning ordinance. Once a zoning ordinance has been finalised (and no further appeals are possible) expropriation begins with an administrative law procedure, under which objections and appeals are possible in relation to the private interests of the landowners. This is followed by a civil law procedure where experts are appointed to determine the damages (based on the "full compensation" principle) suffered by the owners, lessees and others whose property has been subject to expropriation.
Is real estate registered?
If so, is this official information made available to the public?
Yes, in the Netherlands there is a centrally run Land Register with 15 divisions. These registers record all important information concerning properties in their region. All properties have their own specific section and number in the Land Register, which is available online to all notaries. It is impossible to transfer property without registration.
Is transfer of title recorded?
Can other related deeds (for example, preliminary sale agreements) be recorded?
The purchase agreement forms the basis for the transfer deed. In the Netherlands, real estate is transferred by registration of a certified copy of the notarial transfer deed in the Land Register. This deed is signed by all parties and by the Dutch civil law notary, who then submits a certified copy to the Land Register. Once the Land Registry receives this, a preliminary note is made in the Land Register. The civil law notary will always check the online Land Register before signing the deed.
All in rem rights are transferred by registration. In order to protect the buyer's rights, it is possible to register a certified copy of the signed purchase agreement (the maximum protection period is six months preceding the actual transfer of the property).
Do buyers usually carry out due diligence?
If so, what due diligence is typically conducted and what is its timing (i.e. before or after contract execution)? Is there any protection for the buyer during the due diligence period (for example an exclusive right to negotiate or buy)?
In a letter of intent, the buyer and seller agree on the scope of the investigation. The buyer will, in particular, investigate the title of the real estate, lease contracts and environmental issues, such as asbestos and soil pollution. Due diligence normally takes several weeks. The buyer only has protection during this period if this is provided for explicitly in a letter of intent.
Is title insurance available?
No, the registration process offers the buyer an appropriate level of security.
How are deals typically structured?
The structure of a deal depends on specific circumstances but two structures are particularly common: building land can be supplied in the form of a "site prepared for building" and will be subject to VAT, or, in the case of real estate investments, deals are typically structured through a corporate entity called the "CV/BV combination".
B. STRUCTURE OF THE CONTRACT
Are there formal requirements regarding the content and structure of the sale and purchase contract?
The purchase contract must include the names of the seller, buyer, the purchase price, details of the real estate, and the date of completion.
What is a typical contract like?
A typical contract will include the following: definitions; special conditions (costs/taxes); representation by the seller as to ownership; lease agreements; pollution; representation by the buyer; delivery and deposit, or bank guarantee (10% of purchase price); conditions to be satisfied and other special conditions; jurisdiction and choice of law; cooling-off period of three days (residential); standard conditions.
Are special consents required for certain transactions (for example consent by a spouse)?
A spouse must give consent in writing for the sale of the marital home.
What seller's warranties are provided under statute (for example the state of the building, asbestos, etc.)?
Can they be excluded or varied by contractual agreement? Is there a deadline for claims to be made?
The property must be fit for normal use and/or any special uses expressly agreed. Complaints about the state of the property must be made within two months and claims must be instigated within two years of purchase.
What are the buyer's remedies against misrepresentation by the seller?
Buyer's remedies include: annulment or dissolution of the agreement, restoration of missing items, replacement, repair, or compensation.
Are there any interests in real estate other than exclusive ownership?
If so, what are they?
Other rights to real estate include:
- rights of superficies – the right to own property on someone else's land;
- apartment rights (condominiums) - the ownership of part of a property, including the exclusive right to an apartment, and shared rights and obligations in relation to common areas (for example walls, roof, land);
- rights of leasehold - long leases (of approximately 50 years) for property are a very common way of holding property owned by the municipality of Amsterdam, and may be transferred and mortgaged.
C. PUBLIC LAW ASPECTS RELATED TO THE ACQUISITION OF REAL ESTATE
What are the most important areas of public law for an investor to consider when purchasing real estate?
These include:
- the Zoning Ordinance which shows local allocation of land uses;
- the Exploitation Ordinance, which fixes to what extent local authorities are free to charge private developers for their administrative cooperation;
- regional plans for the wider area, with which zoning ordinances must comply;
- the Spatial Planning Act, which sets out procedures for local authorities to make zoning ordinances, grant building permits, and also any private law agreements with developers concerning third party damage;
- the Housing Act, which sets out conditions for building operations and permit exemptions, and local authorities' powers of enforcement.
Is the buyer of a real estate asset responsible for soil pollution or contamination of the building even if it is not caused by him?
Yes.
How can a buyer ascertain the possible uses of an area under the applicable zoning or planning laws?
Can uses be changed?
The buyer should investigate the Zoning Ordinance. Use can be changed through an exemption (vrijstelling) procedure.
Is it possible to enter into specific development agreements with relevant public authorities in order to facilitate a project?
Can public authorities make a charge for this?
Yes, charges must be based on the Exploitation Ordinance. A new law enables municipalities to contract that any claims for third party damage will be the responsibility of the private developer.
D. TAXES RELATED TO ACQUISITION OF REAL ESTATE
Are there transfer taxes or sales taxes?
A transfer tax at 6% applies. In the case of "new" real estate, the transfer may instead be subject to turnover tax (VAT) at 19%.
What are the normal transaction costs?
This depends on the value of the real estate. Costs are normally about 10% of the purchase price, including transfer tax (6% of the purchase price), notary fees, the cost of registration in the Land Register and estate agency fees.
How are transaction costs shared by the buyer and seller?
Normally the buyer will pay most of the costs. However, in the case of newly built real estate, costs are normally paid by the seller.
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